PHOENIX (Jan. 23, 2001) — Michelin Americas Small Tires exceeded its lofty double-digit sales growth goals last year, but at a price.
The company´s efforts to supply as many P235/75R15 P-metric light truck tires as possible to fill demand created by the Firestone ATX/Wilderness recall left MAST with the lowest return on assets within Group Michelin´s major operating units, MAST COO Pete Selleck told those attending the company´s 2001 national dealer sales conference.
"Our financial performance...was far below expectations," Mr. Selleck said, blaming high interest rates, sharply increased fuel, energy and raw materials costs, higher labor costs and operational inefficiences brought on by the recall-induced shift in manufacturing priorities.
"Therefore we cannot justify further growth in the North American passenger tire business until our return on assets improves to more competitive levels within our company," he said.
Mr. Selleck said MAST would focus this year on streamlining its cost structure and reducing the asset base. He did not elaborate on either course of action.
"Improving our return on assets is important to you," Mr. Selleck told the dealers in attendance, "as it is critical to sustain our ability to invest in the initiatives that add value to your businesses — like the equity of our brands, TIMS and BibNet technology, and other added-value services."
Overall, Michelin executives expect MAST to grow about 8 percent this year, following double-digit growth in 2000. MAST officials declined to specify the company´s sales volume, but did say MAST brands accounted for 55 percent of overall U.S. passenger tire aftermarket growth last year.
If MAST achieves its growth objectives this year, it would pick up another point of market share, since the overall passenger tire replacement market is forecast to be essentially unchanged from 2000.